Correlation Between NMI Holdings and SLR Investment
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and SLR Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NMI Holdings and SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and SLR Investment Corp, you can compare the effects of market volatilities on NMI Holdings and SLR Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NMI Holdings with a short position of SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and SLR Investment.
Diversification Opportunities for NMI Holdings and SLR Investment
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and SLR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and NMI Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NMI Holdings are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of NMI Holdings i.e., NMI Holdings and SLR Investment go up and down completely randomly.
Pair Corralation between NMI Holdings and SLR Investment
Assuming the 90 days horizon NMI Holdings is expected to generate 1.42 times more return on investment than SLR Investment. However, NMI Holdings is 1.42 times more volatile than SLR Investment Corp. It trades about 0.1 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.09 per unit of risk. If you would invest 2,080 in NMI Holdings on August 26, 2024 and sell it today you would earn a total of 1,500 from holding NMI Holdings or generate 72.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. SLR Investment Corp
Performance |
| Timeline |
| NMI Holdings |
| SLR Investment Corp |
NMI Holdings and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and SLR Investment
The main advantage of trading using opposite NMI Holdings and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, SLR Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SLR Investment will offset losses from the drop in SLR Investment's long position.| NMI Holdings vs. USWE SPORTS AB | NMI Holdings vs. GungHo Online Entertainment | NMI Holdings vs. Ming Le Sports | NMI Holdings vs. DICKS Sporting Goods |
| SLR Investment vs. The Bank of | SLR Investment vs. Ares Management Corp | SLR Investment vs. Superior Plus Corp | SLR Investment vs. NMI Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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